United Airlines Pilot Financial Planning: The PRAP, CBP, and an RHA Most Pilots Underuse

United Airlines pilots under the UPA 2023 contract earn widebody captain rates matching the best in U.S. commercial aviation — approximately $465.13 per hour on the 787 and 777, and $373.33 per hour on narrowbody aircraft, translating to base pay of roughly $448,000 to $558,000 annually for senior captains at the 100-hour monthly equivalent.¹ The compensation structure also includes annual pay step-ups through 2027 and profit sharing tied to United's profitability — historically running approximately 7–8% of eligible earnings in recent years.

The retirement infrastructure behind that compensation is more layered than at most airlines. United has no active defined-benefit pension — the pilot pension plan was terminated in 2005 during UAL's bankruptcy, the largest pension failure PBGC had ever absorbed at the time. What replaced it is a three-part system: the Pilot Retirement Account Plan (PRAP), a Cash Balance Plan (CBP) for §415(c) spillover, and a Retiree Health Account (RHA) that functions as a parallel spillover target with tax-free healthcare withdrawal mechanics. The RHA is unique to United among major U.S. carriers and is consistently underused by pilots who don't understand how it works or why it matters more than additional CBP contributions for pilots with significant projected healthcare costs in retirement.

The 415(c) bucket: why the PRAP ceiling matters at high incomes

The IRS §415(c) limit caps total annual additions to a defined-contribution plan — employer NEC plus employee deferrals plus after-tax contributions — at $72,000 in 2026.⁴ The §401(a)(17) limit caps the compensation recognized for qualified plan calculations at $360,000 in 2026.⁴

Run the 2026 math for a United captain at or above the comp cap: 18% × $360,000 = $64,800 in company NEC. That fills most of the PRAP's §415(c) room, leaving only $7,200 for employee deferrals. The 50+ catch-up ($8,000) and the ages 60–63 super catch-up ($11,250 per SECURE 2.0 §108) are excluded from §415(c) and remain fully available on top.⁴

For widebody captains earning above the comp cap, the practical consequence is that the employee deferral you can contribute inside the PRAP is only $7,200 — far below the $24,500 standard limit. Once PRAP contributions reach §415(c), further company NEC flows to the CBP or RHA. The pilot sets the spillover destination. That decision is not trivial.

The CBP and RHA spillover decision

United is unique among major U.S. carriers in offering two tax-advantaged spillover destinations when the PRAP hits its ceiling. Both receive pre-tax employer contributions. The critical difference is in how withdrawals are taxed:

The RHA's tax-free withdrawal mechanics for qualified medical expenses are superior to the CBP for funding a cost category that every retired pilot faces. Medicare Part B premiums in 2026 start at approximately $185/month for beneficiaries below the IRMAA threshold — but for pilots with high MAGI in their working years, the surcharges can push premiums significantly higher. A retired United captain with MAGI of $200,000 in year one of retirement (IRMAA is based on income two years prior) faces Medicare Part B and D premiums of thousands per year. Withdrawals from the RHA to cover those premiums cost zero in federal income tax. Equivalent withdrawals from the CBP are taxed at ordinary income rates.³

The practical guidance most United pilot advisors give is: fund the RHA to an estimate of your projected healthcare costs in retirement before directing additional spillover to the CBP. Healthcare in retirement for a 20-year retiree (age 65 to 85) is a material expense — and paying for it with pre-tax dollars that withdraw tax-free is a meaningful structural advantage.

Profit sharing: the W-2 event most United pilots underplan

United pilots receive annual profit sharing tied to the company's profitability formula under the UPA 2023 contract. Historical payouts have run approximately 7–8% of eligible earnings in strong years, arriving as ordinary W-2 income. The exact percentage varies annually; United's formula is structurally different from Delta's fixed-percentage calculation, and exact 2025 payout figures are disclosed in February 2026 at the time of payment.¹

The planning window is the same as at every airline: January, before the check clears. By then, you know whether United had a profitable year and can model the size of the incoming payment. The available moves are limited but meaningful:

1. Model your IRMAA exposure two years forward. Profit sharing adds to your MAGI. If the payout pushes you across an IRMAA tier boundary, the Medicare premium surcharge hits in year two — after you can no longer undo it. Price that impact before it's locked in. The 2026 IRMAA first tier starts at $109,000 (individual) / $218,000 (MFJ).⁴
2. Front-load any remaining PRAP deferral room. If you haven't hit your employee deferral limit early in the year, adjusting your contribution rate in January can shelter more income before the profit sharing W-2 arrives.
3. Decide what the after-tax dollars do. Taxable brokerage index funds, I-bonds to the annual limit, or maxing a backdoor Roth for the year are the primary options. Sitting in savings is a decision by default — usually a costly one.

The 2005 pension termination: what PBGC actually pays United pilots

United Airlines (UAL Corporation) declared bankruptcy in December 2002. In April 2005, PBGC and UAL reached a settlement agreement to terminate UAL's four pension plans, which were underfunded by more than $10 billion. PBGC became the trustee of the United Airlines pilot pension plan — at the time, the largest pension liability PBGC had ever assumed.⁵

For pilots who had accrued benefits under the old plan, the financial reality is harsh. Pilots who expected pensions of up to $125,000 per year faced maximum PBGC-guaranteed payments of approximately $28,000 per year for those retiring at age 60 — a cut of 50 to 75 percent from projected plan benefits. For mandatory retirement at 65, the guarantee ceiling is higher per the PBGC's table for 2005 plan terminations, but still substantially below what most affected pilots had modeled.⁵

If you are a legacy United pilot with PBGC benefits: treat the PBGC annuity as a partial floor. It doesn't adjust for inflation at the same rate a funded pension would have, and the guarantee is fixed at 2005 termination-year rates. Build your retirement income plan around the PRAP/CBP/RHA as the primary sources. Any PBGC annuity is supplemental, not foundational.

Backdoor Roth for United captains

The Roth IRA direct contribution phaseout begins at $236,000 for married-filing-jointly and completes at $246,000 in 2026.⁴ Any United narrowbody or widebody captain is above the threshold. The backdoor Roth — nondeductible traditional IRA contribution followed immediately by conversion — adds $7,000 ($8,000 if age 50+) in Roth space annually, regardless of income.

The pro-rata rule trap is the same at United as at every airline. If you hold pre-tax IRA balances — rollover IRAs from regional years or earlier career jobs — the IRS aggregates all traditional IRAs when calculating the taxable fraction of any conversion. A $150,000 rollover IRA can make the backdoor Roth largely taxable at your marginal rate (typically 37% at captain incomes). The clean solution is to roll the pre-tax IRA into the PRAP if the plan document accepts incoming rollovers, eliminating the pro-rata problem. Verify rollover-in eligibility with the Schwab PRAP administrator.

The mega backdoor Roth — after-tax 401(k) contributions followed by in-plan Roth conversion — is available only if the PRAP plan document permits after-tax contributions and in-service distributions. Verify current plan document terms before assuming availability.

Career-stage priorities for United pilots

First officer years: infrastructure before lifestyle

United mainline FO pay starts well above regional rates — new hire FOs in 2026 earn $125.52/hr, climbing significantly with seniority.¹ At FO income levels, full §415(c) deferral room typically exists, so priorities are different than at captain income. Elect Roth 401(k) in the PRAP if you expect to be in a materially higher bracket as a captain (the tax arbitrage is real and compounding works in your favor). Enroll in loss-of-license disability coverage during the new-hire enrollment window — after the window closes, you may need to underwrite for any additional coverage. Confirm whether your pre-tax IRA situation will create a pro-rata issue before you make your first backdoor Roth attempt.

Captain upgrade: the highest-leverage planning event

Each seat upgrade at United changes your §415(c) math. At narrowbody captain rates, the company NEC nearly fills the bucket. At widebody captain rates, spillover is nearly certain for most of the year. Priorities at upgrade: recalculate your §415(c) room and set your employee deferral rate accordingly (an excess contribution creates corrective paperwork); choose your CBP vs. RHA spillover allocation deliberately rather than leaving the default; update disability coverage limits if income has materially changed; and revisit the pre-tax IRA rollover-in question to clear the pro-rata rule for backdoor Roth.

Senior captain, ages 55–65: the accumulation sprint

SECURE 2.0 §108 permits a super catch-up contribution of $11,250 (excluded from §415(c)) for pilots ages 60–63 in 2026.⁴ At age 62, a United widebody captain can deposit $83,250 total into the PRAP ($64,800 employer NEC + $7,200 employee deferral + $11,250 super catch-up), plus additional amounts to the CBP/RHA above the §415(c) ceiling. Priorities for this decade: run the RHA balance against a realistic healthcare cost projection to age 85; model the Social Security bridge from mandatory retirement at 65 to your chosen claiming age (FRA is 67); front-load Roth conversions in the gap after retirement before RMDs begin at 73 per SECURE 2.0 §107; and audit all beneficiary designations on PRAP, CBP, and RHA accounts.⁴

1. Bandana Resources: How Much Do United Airlines Pilots Make? (2026). Also: One Mile at a Time: United Airlines Pilots Ratify New Contract With $10 Billion In Raises. UPA 2023 ratified September 2023; total 40% pay increase over the contract period. Widebody captain hourly rate (787/777): approximately $465.13/hr; narrowbody captain: approximately $373.33/hr; new hire FO: $125.52/hr. Annual income estimates based on published hourly rates and 100-hour monthly equivalent; actual income varies by bid, overtime, and contract progression. Profit sharing tied to United's annual profitability formula; historical rates approximately 7–8% of eligible earnings in recent profitable years; exact 2025 percentage not publicly confirmed at time of publication.
2. Creative Planning: UPA 2023 Financial Considerations for United Airlines Pilots. Also: Smith Anglin: United Airlines Pilots — Navigating the 2025 Market-Based Cash Balance Plan. PRAP company NEC under UPA 2023: 16% at ratification (September 2023), 17% in 2024–2025 contract year, 18% in 2026. CBP implemented to capture §415(c) overflow; operations and eligibility conditions have been refined since 2023 ratification — verify current mechanics with plan administrator. PRAP administered by Schwab.
3. Delphi Advisers: Primer on the UAL Pilot Retiree Health Account (RHA). Also: Bonfire Financial: United Employee Benefits — How to Leverage Your RHA for Tax-Free Growth. RHA funded by PRAP spillover contributions exceeding §415(c) limit; contributions flow pre-tax into a VEBA trust; withdrawals for qualified medical expenses (including Medicare premiums) are tax-free under IRC §501(c)(9). RHA currently invested in Vanguard Target Date Retirement Funds. Pilots can direct spillover to RHA, CBP, or split between both. Confirm current allocation election and any 2026 rule updates with plan administrator.
4. IRS Notice 2025-67: 2026 Retirement Plan Contribution Limits. §415(c) annual additions limit: $72,000. §401(a)(17) compensation limit: $360,000. Employee 401(k) elective deferral: $24,500. Age 50+ catch-up: $8,000 (excluded from §415(c)). Ages 60–63 SECURE 2.0 super catch-up (§108): $11,250 (excluded from §415(c)). Roth IRA income phaseout MFJ: $236,000–$246,000. IRMAA first income tier: $109,000 (individual) / $218,000 (MFJ) based on MAGI two years prior. RMD age: 73 for those born 1951–1959 per SECURE 2.0 §107; 75 for those born 1960 or later.
5. PBGC: FAQ — UAL Asset Audit Review and Changes to Participants' Benefits. Also: PBGC: Why PBGC Cannot Restore the United Airlines' Pension Plans. UAL Corporation filed Chapter 11 bankruptcy December 2002. PBGC and UAL settlement agreement April 22, 2005; all four UAL pension plans terminated; PBGC received consideration of approximately $1.6 billion. United Airlines pilot pension plan assets at termination severely underfunded against liabilities; PBGC takeover at termination was the largest in PBGC history at the time. PBGC maximum guarantee for pilots retiring at age 60 from the 2005 plan termination: approximately $28,000/year — pilots expecting $125,000/year faced cuts of 50–75%. PBGC amounts are fixed at plan termination year rates and are not broadly inflation-adjusted.

Retirement plan limits verified against IRS Notice 2025-67 (November 2025). United Airlines pay rates and PRAP/CBP/RHA contribution structure reflect the UPA 2023 Pilot Working Agreement and publicly available resources current as of May 2026. PRAP, CBP, and RHA mechanics — particularly CBP implementation specifics and spillover allocation rules — should be confirmed with the Schwab PRAP administrator and the UPA 2023 Summary Plan Description, as implementation details have evolved since contract ratification. PBGC amounts for individual legacy pilots vary based on accrued benefit, service years, and age at retirement; contact PBGC directly for personalized benefit estimates.